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MICROECONOMICSby Robert S. Pindyck Daniel RubinfeldNinth EditionCopyright ? 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved
Chapter 13Game Theory and Competitive StrategyCHAPTER OUTLINE13.1 Gaming and Strategic Decisions13.2 Dominant Strategies13.3 The Nash Equilibrium Revisited13.4 Repeated Games13.5 Sequential Games13.6 Threats, Commitments and Credibility13.7 Entry Deterrence13.8 AuctionsAppendix: Production and Cost Theory—A Mathematical TreatmentLIST OF EXAMPLES13.1 Acquiring a Company13.2 Oligopolistic Cooperation in the Water Meter Industry13.3 Competition and Collusion in the Airline Industry13.4 Wal-Mart Stores’ Preemptive Investment Strategy13.5 Industry Transformation: Uber and Lyft13.6 Diaper Wars13.7 Auctioning Legal Services13.8 Auctions in Practice
13.1 Gaming and Strategic Decisions (1 of 3)game Situation in which players (participants) make strategic decisions that take into account each other’s actions and responses.payoff Value associated with a possible outcome.strategy Rule or plan of action for playing a game.optimal strategy Strategy that maximizes a player’s expected payoff.If I believe that my competitors are rational and act to maximize their own payoffs, how should I take their behavior into account when making my decisions?Determining optimal strategies can be difficult, even under conditions of complete symmetry and perfect information.
13.1 Gaming and Strategic Decisions (2 of 3)Noncooperative versus Cooperative Gamescooperative game Game in which participants can negotiate binding contracts that allow them to plan joint strategies.noncooperative game Game in which negotiation and enforcement of binding contracts are not possible.Note that the fundamental difference between cooperative and noncooperative games lies in the contracting possibilities. In cooperative games, binding contracts are possible; in noncooperative games, they are not.It is essential to understand your opponent’s point of view and to deduce his or her l
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